Is Your World Flat?
Making your organization more global
Thomas Friedman’s book, The World is Flat, published in 2005, foretold of a world in which the barriers to global trade would fall and even less developed economies would find parity in competition. The Han Dynasty and Mesopotamian empire might have questioned why we think we are the first to be excited about global trade, since they began building the silk road in 2000 BCE. Of course, early traders lacked the sophisticated tools we possess today that allow trade to occur seamlessly and in real time, but from an organizational standpoint, they would probably feel right at home. “Headquarters” is staffed mainly with host country individuals, as are the majority of leadership positions. Representatives of other parts of the world come to visit and sometimes relocate permanently. Business is conducted by representatives who speak the local language and understand local business customs. Profits are returned to the center and either disbursed to owners or invested in further expansion. Control is for the most part top-down, with severe penalties for not following orders. Employees have specialized roles that allow work to be performed efficiently. Important customers receive special treatment, and dependable suppliers are awarded return business.
The question is, what century is your business operating in? While the world is flatter, most organizations are not, either in their structure or their operating approach. How can you help your organization catch up with the pace of globalization? There are several strategies to consider.
1. Globalize the leadership team
Changing the composition of the executive team (or board, in Europe) will definitely change the nature of the conversation around the table. Moreover, having voices at this level of authority is likely to have a significant impact on global strategies and operating decisions. Simply having a diverse group of visitors or ex-pats at headquarters who aren’t on the executive team won’t do this.
2. Stay connected to the world
If executives move away from their markets of origin, they are likely to lose touch with important developments in those places. Personal connections with leaders of customer or supplier organizations in those regions are easier to maintain if one is present, especially when turnover of those key leaders occurs. Short of staying put, frequent personal visits are much more effective than online meetings. Organizations are still run by people and relationships with those people can be critically important, especially in a crisis or when trying to introduce innovation.
3. Globalize organizational structures
Organizations that concentrate power in global functions for the sake of maintaining consistency across the globe run in a more centralized manner, reducing their openness to input from distant voices. The opposite is true for organizations that structure themselves around regional businesses, where leaders of largely independent units make up the leadership team of the overall company. Overlaying a functional matrix can ensure coordination takes place when necessary but it’s important that the functional heads not be allowed to overpower the regional business unit leaders or the added value of the structure will be defeated.
4. Reconfigure the external board
More intentionally recruiting independent board members who hail from different origins can extinguish any vestiges of the “old boys club” that may have existed previously. With global representation at the board table, management presentations are reformulated to address broader concerns than profits and losses alone. More attention to global opportunities and more effort put into thinking globally produces more global action, which in turn produces greater sophistication in global matters. This virtuous cycle shifts investments, products, and markets over time.
5. Create temporary global working groups
There are many issues that can benefit from taking a global perspective rather than a strictly local one. Rethinking the global supply chain, introducing new technologies (including AI), tapping into global knowledge, experimenting with new designs for work, leading global customer councils, and managing global talent are but a few of these issues. Imagine the difference between a global group tackling these challenges and a few people being assigned the responsibility to make decisions at headquarters. Even with some input from local sources, a headquarters team is unlikely to reflect the depth and diversity of thought that a global team can bring.
6. Commission a global special issues advisory board
If it proves difficult to reconstitute the external board of directors, a special issues advisory board composed of global members can perform a similar function. Such a group carries the added advantage of convening only when necessary and for a defined period of time. The temporary nature of the advisory board may also allow individual to participate who would otherwise be unable to serve on a continuing basis.
7. Concentrate travel
Many executives travel to the corners of the corporate empire but often there is no concentrated effort to learn more about the region or for the leadership team to learn by traveling together. Concentrated travel refers to travel by multiple or all members of an executive team with a carefully planned agendas to leverage opportunities to learn from time spent abroad. Customer visits, meetings with government representatives, tours of local innovation centers, and time spent at various company facilities to meet employees and local leaders can be quite worthwhile.
8. Bring the world to you
Although not the same as being there, having a program of regular visits by people from different regions to talk about issues of concern can be informative. Beyond just the presentation, the discussion that follows is where the real value is to be found.
9. Create multiple headquarters
Some companies have established multiple global headquarters with the idea that breaking the stranglehold of a single geography is critical to instilling a global mindset among executives. With no “center of gravity” dictating every decision, thinking out of the geographical box is more natural. Even the “across the Channel” dual headquarters of Unilever and Shell had this effect; that effect is magnified when headquarters are in different hemispheres, like those of Rio Tinto and HSBC.
10. Adopt a global acquisition strategy
For companies without a foothold in other geographies, the first step is usually to work through local agents. To move toward a more enduring global footprint, companies can create a plan for making selective acquisitions in remote geographies. The work involved in executing and then managing global acquisitions should not be underestimated. This strategy only makes sense if the strategy for the future of the company involves establishing a greater global presence.
The world has become flatter, but most companies are not operating in ways that allow them to take full advantage of the opportunities this presents. It’s time to leave the Han Dynasty behind and create organizations that are as global as our world has become.